Income Tax Appellate Tribunal - Ahmedabad
Ferromatic Milacron India Ltd., ... vs Department Of Income Tax on 20 November, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "A" AHMEDABAD
Before Shri D.K.Tyagi, Judicial Member and
Shri T.R. Meena, Accountant Member
IT A No.1034/ Ahd/2010
Assessm ent Year:2005-06
DCIT, Circle-4, बनाम Ferom atic Miolacron
Ahm edabad, Navjivan /V/s. India Ltd., 7 t h Floor,
Trust Bldg., Off Ashram Opp. Town hall,
Road, Ellisbridge, Ahm edabad
[PAN No. AABCC 0881D]
अपीलाथȸ/Appellant .. ू×यथȸ/Respondent
अपीलाथȸ कȧ ओर से/By Appellant Shri Rahul Kumar, SR-DR
ू×यथȸ कȧ ओर से / By Respondent None
सुनवाई कȧ तारȣख / Date of Hearing 06-08-2012
घोषणा कȧ तारȣख/Date of Pronouncement 14-09-2012
आदे श/O R D E R
PER T.R.Meena, Accountant Member:-
This is Revenue's appeal emanating from the order of Commissioner of Income-tax (Appeals)-VIII, Ahmedabad ('CIT(A)' for short) dated 20-11-2009 for the assessment year (AY) 2005-06. The effective ground of appeal are as under:-
"1. The Ld. CIT(A) has erred in law and on facts in directing the AO to exclude the excise duty of Rs.21,13,097/- from the addition of Rs.70,11,674/- made on account of suppression of sales.
1.1 The Ld. CIT(A) has erred in law and on facts in not appreciating the fact that since the entire amount had not been recorded as sales and treated as unaccounted sales, no credit for any amount in the above amount could be given to the assessee..ITA No.1034/Ahd/2010 A.Y. 2005-06
DCIT Cir-4, AHD v. Feromatic Miolacron India Ltd. Page 2
2. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs.1,64,474/- made on account of trade mark registration expenses holding the same as capital expenses.
2.1 The Ld. CIT(A) has erred in law and on facts in not appreciating the fact that the trade mark registrations are long term registration which enhance the value of enterprise and goodwill."
2. The factual matrix of the case is that the assessee-company is engaged in the business of manufacturing of plastic processing machines. During the year under consideration, the Assessing Officer (AO) observed that the assessee has shown closing stock of machinery value of Rs.80,49,323/- and note was placed below quantitative stock that stock include machinery dispatch account of CIF sales pending shipment at port. The particulars of the sale bill are as under:-
Invoice Date No. of Amount Excise Total Date of No. machine Amt. dispatch as per excise 232 28.2.05 1 3436500 560837 3997337 28.3.05 233 28.3.05 1 9511400 1552260 11063660 29.3.04 Total 12947900 2113097 1506097 The goods were dispatched from the factory by the assessee-company before 29-03-2005 but before the AO the assessee claimed that sales were executed under FOB and CFR terms and therefore risk transfers from the seller to the buyer when the goods pass ship or rail. Therefore, the same were not shown as a sale but treated as a stock. The assessee's claim was not found convincing to the AO, therefore he made addition of Rs.70,22,674/- i.e., difference between sale value of Rs.1,50,60,997/- as per sale bill and value reflected in the closing stock of Rs.80,49,323/-.
3. Being aggrieved by this order assessee carried the matter before Ld. CIT(A) who confirmed the addition to the extent of Rs.48,98,577/- on the basis of Ld. CIT(A)'s order passed in AY 2004-05 being are recurring issue in case ITA No.1034/Ahd/2010 A.Y. 2005-06 DCIT Cir-4, AHD v. Feromatic Miolacron India Ltd. Page 3 of assessee. However, he found that on export no excise duty is leviable. Therefore, he deleted the addition of Rs.21,13,097/- being notional excise duty from export sale. Now, the Revenue is in appeal before us.
4. Ld. DR of the Revenue vehemently argued that Assessing Officer has rightly made addition on the basis of sale bill of export sale in which excise duty had been shown by the assessee-company. Therefore the addition may be confirmed. From the side of assessee none appeared on behalf of the assessee.
5. We have heard the Ld. DR and perused the materials available on record. We find that on verification of the Ld. CIT(A)'s order it is found that excise duty is not leviable on export sale in past also such addition was also not made in assessee's own case on account of notional excise duty. Thus, we confirm the order of Ld. CIT(A) and this ground of Revenue's appeal is dismissed.
6. Second ground of Revenue's appeal is deleting the disallowance made on account of trade-mark registration. The assessee has claimed Rs.1,64,474/- expenses on account of trade-mark registration which was held by the Assessing Officer as capital expenditure. On the basis of it enhance the value of the goodwill of the assessee in market which helps directly or indirectly to improve earning capacity of the assessee. When matter heard by Ld. CIT(A) on this issue, the assessee submitted before Ld. CIT(A) that this expense includes purchase of stamp duty of Rs.31,570/-, trade-mark and ROC of Rs.35,404/- and trade-mark registration of Rs.99,500/-. The assessee also relied on the judgment of Hon'ble apex court in the case of CIT v. Finlay Mills Ltd. 20 ITR 477 (SC), which directly covered the present issue and held that expenditure incurred by the assessee-company in registration for the first time its trade-mark is revenue expenditure. The assessee again cited judgment of Hon'ble Bombay High Court in the case of CIT v. Century ITA No.1034/Ahd/2010 A.Y. 2005-06 DCIT Cir-4, AHD v. Feromatic Miolacron India Ltd. Page 4 Spinning Weaving and Manufacturing Co. Ltd. 15 ITR 105 (Bom) where the Hon'ble High Court has held that expenditure incurred on registration of trade- mark does not bring into new asset for the assessee. It is apparent that no enduring benefit is received by the assessee on account of any expenditure incurred for registration of the trade-mark & confirmed first rights for limited period. Thus, we do not find any reason to interfere into the order passed by Ld. CIT(A). This ground of Revenue's appeal is also dismissed.
7. In the result, appeal filed by Revenue is dismissed. Order pronounced in Open Court on the date mentioned hereinabove at caption page.
Sd/- Sd/-
(D.K.Tyagi) (T.R.Meena)
(Judicial Member) (Accountant Member)
Ǒदनांकः- 14/09/2012 अहमदाबाद ।
DKP*
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, /True Copy/ उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।
Strengthen preparation & delivery of orders in the ITAT
1) date of taking dictation 12/09
2) direct dictation by Member straight on No. computer/laptop/dragon dictate
3) date of typing & draft order place before Member 12/09 4) date of correction 13/09
5) date of further correction
6) date of initial sign by Members
7) order uploaded on
8) original dictation pad-part has been enclosed in the file
9) final order and 2nd copy send to Bench Clerk on ITA No.1034/Ahd/2010 A.Y. 2005-06 DCIT Cir-4, AHD v. Feromatic Miolacron India Ltd. Page 5